Could Facebook Replace Your Bank Account?

Earlier in the year it became known Facebook will integrate Messenger, Whatsapp and Instagram’s messaging systems into a single unified platform. Here’s a take on why they’re going to the trouble.

TL;DR

Messaging

+ Cryptocurrency

+ Ecommerce

= A new revenue stream potentially worth billions and a better experience for everyone involved.

It’s an about face from Zuckerberg’s previous stance on keeping Whatsapp and Instagram independent. But recent news about their progress in developing their own cryptocurrency may fill in the blank spaces.

Facebook is a seller of audiences. We users are their product; they parse, sort, filter and bundle audiences for brands wanting to connect with customers. It’s a successful business model but it isn’t perfect. Users are uneasy about the security of their personal info, and marketers want data confirming Return On Investment.

Facebook thrives or dies by keeping both sides of the equation happy.

This puts Facebook in a bind when those needs are in conflict, and it’s one instant messaging could hold the key to, if it’s combined with another factor: commerce. Which is where messaging unification and cryptocurrency merge as a potential new revenue model.

Social media use has matured from a doors-wide-open approach to more nuanced use, focusing on quasi-confidential groups and semi-private interactions. As the newsfeed’s prominence wanes and messaging rises in importance, expect more features and functions to be built into chat. WeChat’s pioneering this in a big way, and Facebook may be gearing up to follow their lead. A single unified system may also mean a single unified online identity: you may want to be one kind of way on Instagram and another on Whatsapp, but this integration may make that more difficult.

UNIFICATION IS STREAMLINING

If payments, data profiles and commerce are the same across the board, this will simplify the execution and management of transactions, which could mean investing in integration now pays big dividends later. The scale Facebook operates on makes this sensible. You gotta wonder if they were thinking about this when they paid $19 Billion for Whatsapp.

WHY A CRYPTOCURRENCY?

One aspect is most certainly control. Using fiat currencies will involve banks, cross border controls, taxes, regulation and all manner of complications, all of which carry costs and will eat into profit margins. Their own cryptocurrency solves a lot of those issues. It also means the currency stays in the system: you use FB’s Globalcoin to buy a new pair of shoes from Nike, who then uses it to pay the influencers in their latest campaign. Facebook may even be paying its own employees in it. That’s a big vote of confidence in its use, potential and the ease in which you can move it out into fiat (should you ever need to). A Barclays Analyst estimated the cryptocurrency could generate anywhere up to $19 billion in additional revenue by 2021, which means Whatsapp would have paid for itself in less than 6 years.

WHERE DOES THAT LEAVE PAGES AND NEWS FEEDS?

Chat doing the heavy lifting for commerce and communication means other channels, like newsfeed or your ‘gram stream, can re-focus on other elements. less buttons, less likes and comments, more imagery. Putting less influence on function may let the focus return to form. In other words, content might become more fun, and less, consumer-centric. This could be a good thing for everyone. Pages might become e-commerce storefronts, with your transactions recorded in IM between you and the seller. Marketplace becomes a whole different animal too: if Facebook becomes both the location of the sale and the arbiter of the transaction, they can offer both buyer and seller significant security and trust. FB starts looking more like Amazon with social connections (and we all know how important trusted recommendations are to purchases).

HOW DO THEY MAKE MONEY?

Same as they always have: through ads. A unified profile means even MORE data about each user, which means even better targeting, resulting in fewer, but more relevant, ads. Except maybe now, you take a cut. FB could pay you a portion of the fee solicited from the marketer in exchange for your attention. It’s a model the Brave Browser has been developing. Another option may be users paying a fee to reduce, or even eliminate, the quantity of ads served. And Facebook could take a tiny cut from any person-to-person transaction. Two billion users mean those transactions will add up FAST. The combination of these possibilities makes the whole prospect a lot more attractive, which should scare the pants off Amazon. And the banking sector. And the currency conversion and remittance industries. And probably a bunch of other industries which could become obsolete.

As weird as it sounds, we might all be a matter of years away from replacing our credit cards with Facebook apps – Adam Rowe

We can postulate all we want about the future, but the pieces of the puzzle are very much in the present: the cryptocurrency, the unified messaging, the commerce, marketers’ need for verifiable results, user concerns about privacy and the growth of messaging as a multi-faceted communication platform.